Good day, ladies and gentlemen, and welcome to the First Quarter 2012 Pepco Holdings Incorporated Earnings Conference Call. My name is Pam, and I'll be your operator for today. [Operator Instructions] As a reminder, this conference is being recorded for replay purposes. I would now like to turn the conference over to Ms. Donna Kinzel, Vice President of Investor Relations. Please proceed.

Donna J. Kinzel

Thank you, Pam, and good morning, ladies and gentlemen. Welcome to the Pepco Holdings' First Quarter 2012 Earnings Conference Call. The primary speakers on today's call are Joe Rigby, Chairman, President and Chief Executive Officer; and Fred Boyle, Senior Vice President and Chief Financial Officer. Also available to answer your questions are Tony Kamerick, Executive Vice President and Chief Regulatory Officer; Dave Velazquez, Executive Vice President, Power Delivery; and John Huffman, President and Chief Executive Officer of Pepco Energy Services.

On today's call, we will be referring to slides, which are available on the Investor Relations section of our website. Before Joe begins, let me remind you that some of the comments made during today's conference call may be considered forward looking statements. As such, they should be taken in the context of the risks and uncertainties discussed in the Safe Harbor disclosures contained in our Securities and Exchange Commission filings and found on Slide 2 of our presentation.

Also please note that today's call will include a discussion of our results excluding an item that we feel is not representative of the company's ongoing business operations. The item and the associated financial impact are described in our earnings release dated today. The earnings release can be found on our website at www.pepcoholdings.com/investors. Joe?

Joseph M. Rigby

Thanks, Donna, and good morning, ladies and gentlemen, and thanks for joining us today. Before I get into the earnings discussion, I'd like to take this opportunity to introduce to you Fred Boyle, who joined us as Senior Vice President and Chief Financial Officer in early April. We're really pleased to have Fred on the team. He brings a strong background as an experienced financial leader in the utility industry. He most recently served as Chief Financial Officer of DPL Incorporated, which is the holding company of Dayton Power and Light. Also effective in April, Tony Kamerick was promoted to Executive Vice President and Chief Regulatory officer for PHI. And Tony will continue to report to me and he'll lead our regulatory process through the current cycle of rate cases until his retirement in early 2013.

As you would expect, executive succession planning is a key responsibility for both myself and our Board of Directors, and we're very pleased that these appointments carryout that responsibility in a way that we think effectively aligns and strengthens our senior management team as we move forward. So with that, let me turn to our financial results.

As seen on Slide 3, earnings from continuing operations for the first quarter of 2012 were $68 million compared to $62 million for the first quarter of 2011. The 2011 earnings include $2 million of mark-to-market losses resulting from economic hedging activities associated with the Retail Energy Supply business of Pepco Energy Services. Excluding the impact of the mark-to-market losses, earnings in the first quarter of 2011 would have been $64 million. Mark-to-market losses in the 2012 quarter were less than $1 million.

Our earnings from continuing operations reflect our investment in utility infrastructure, as well as the positive impact of tax adjustments which more than mitigated the effects of the mild winter weather we experienced in our service area. Later on the call, Fred will address the financial results in our operating segment performance in more detail, but first, I'd like to address some topics of interest.

Improving system reliability was a top priority for our company last year and it remains so in 2012. Our reliability enhancements efforts, which initially focused primarily in the Pepco region, have now been extended across the service territories of Atlantic City Electric and Delmarva Power. We continue to make good progress in advancing infrastructure improvements and performing system maintenance.

As shown on Slide 4, during the first quarter of 2012, our utilities invested $280 million in the Power Delivery business. These investments were aimed at enhancing the distribution and transmission systems and providing new services to our customers. Our efforts to improve system reliability are yielding meaningful results, as we continue to see positive trends in the operating performance of our electric system.

We've also seen improvement in customer satisfaction. A recent survey by the American Customer Satisfaction Index showed a 28% improvement in our customer satisfaction score compared to the survey results from one year ago. Our customer satisfaction ratings as measured by the most recent surveys conducted by J.D. Power and Market Strategies International have also shown improvement. And on March 21, the Edison Electric Institute presented Pepco Holdings with the Emergency Recovery Award for the restoration efforts of all of our 3 utilities following Hurricane Irene in August of last year. While we realize there is still more work to be done, we're pleased that these indicators point to our customers' experience in improved level of service.

In Maryland, reliability standards applicable to all the electric utilities in the state have been approved and are now effective. The approved rules are consistent with the draft rules in all material respects and establish requirements for service interruptions, downed wire response, customer communications, vegetation management and equipment inspection among other activities. We support reliability standards that are objective and fair. And in turn, we support a regulatory process that provides the company with an opportunity to obtain timely recovery of these investments and operating costs necessary to meet these standards.

During the first quarter, we continued to make very good progress in implementing our Blueprint for the Future. The status of advanced metering infrastructure in each of our jurisdictions can be seen on Slide 5. Meter installation and activation is complete for Delaware electric customers. For Pepco customers in the District of Columbia, meter installation is nearly complete and activation is well underway. For Pepco's customers in Maryland, meter installation is underway and activation has begun.

The initial customer benefits include the availability of more detailed account-specific information on energy usage, fewer estimated bills, enhanced billing options, as well as an outage detection capability that helps make the restoration process more efficient. As approved by the respective commissions, regulatory assets have been created to assure recovery of and a return on AMI-related costs between rate cases.

As we mentioned on our last earnings call, in December 2011, Delaware approved the implementation of a Critical Peak Rebate form of dynamic pricing for all default service customers with the implementation for residential customers phased in over 2 years beginning this year. Customer education packets have been sent out and customers are now electing their critical peak period notification preference.

Under the Critical Peak Rebate structure, customers are rewarded for lowering their energy use during critical peak periods when energy demand and the cost of supply in electricity are higher. This Critical Peak Rebate structure has been approved in concept in Maryland, and the tariff details are currently being developed by a working group with a hearing scheduled for later this month.

In the District of Columbia, a proposal to implement dynamic pricing is pending. Subject to approval, the phase-in implementation of Pepco's residential customers in Maryland and the District of Columbia is targeted to begin this year and continue into 2013. Through the expansion of the smart grid and implementation of dynamic pricing, we will enable customers to better manage their energy use and lower their energy bills while we gain added tools to improve system reliability.

Now turning to sales. While our customer count was slightly higher in the first quarter of 2012 as compared to the 2011 quarter, weather-adjusted kilowatt-hour sales were down just under 1%, and the actual sales for the quarter were down 6.6%. A portion of the impact of the lower sales was offset by the revenue decoupling mechanisms we have in place, demonstrating the effectiveness of this rate design. With decoupling in place in Maryland and District of Columbia, approximately 2/3 of distribution revenue was decoupled from consumption.

Given our plans to continue extensive investments in our distribution infrastructure, it is critically important to ensure timely cost recovery and the opportunity to earn reasonable rates of return. In 2011, we filed 5 electric distribution rate cases across the 4 jurisdictions we serve in an effort to keep the rate of recovery in line with the growth of our utility investment. Slides 6 through 10 provide the details of the pending cases, including detailed procedural schedules.

In total, the cases request an annual rate increase of $247 million based on returns on equity of 10.75%. Each filing also includes comprehensive discussion on regulatory lag and its negative effects, as well as proposals for adopting mechanisms to reduce regulatory lag. The Reliability Investment Recovery Mechanism, or an infrastructure investment program in the case of New Jersey, provides full and timely recovery for future capital investments related to distribution system reliability.

We have also proposed the use of fully forecasted test years for future rate cases in Maryland, Delaware and the District of Columbia. Hearings were held in the District of Columbia case from January 30 through February 3. As a result of additional detailed data request that arose during the hearings related to the Reliability Investment Recovery Mechanism, or RIM, additional hearings have been scheduled for June 11 and 12.

The subject of the additional hearings has been limited to the RIM. In Maryland, hearings will wrap up next week in both the Pepco and Delmarva Power cases. In New Jersey, hearings are scheduled to begin June 18. And in Delaware, hearings are scheduled to begin July 30.

In the Delaware case, as permitted by Delaware law, Delmarva Power implemented an interim rate increase of $2.5 million on January 31, and plans to implement the remaining $29.3 million of its requested increase on July 2, subject to refund. We expect decisions in the District of Columbia and Maryland cases in the third quarter, and in Delaware and New Jersey cases by the end of the year.

As I've noted, reducing regulatory lag is a significant focus. Our preference is to achieve this by adopting mechanisms that mitigate the need for frequent rate cases which we view as costly and inefficient. However, we are prepared to execute a regulatory strategy that includes frequent cases, if need be, in order to earn returns at or close to what the commissions have authorized.

Another regulatory matter in Maryland is the order issued on April 12 in which the commission determined that there is a need for additional generation in the State. Specifically, the commission ordered Pepco, Delmarva Power and Baltimore Gas & Electric to enter into a long-term contract with the winning bidder of the request for proposal issued last Fall.

Under the contract, the winning bidder will construct the 661-megawatt natural gas-fired combined cycle plant in Waldorf, Maryland, with a commercial operation date of June 2015. The order specifies that the contract amount for each utility would be proportionate to the relative Standard Offer Service, or SOS loads, and that costs recovery would be from SOS customers through surcharges. The order acknowledges concerns raised by the utilities and directs them to negotiate with the winning bidder and submit proposed changes to the contract to the commission for approval.

PHI has concerns about the order, including the full cost burden being placed on SOS customers who may choose to switch to other energy suppliers as well as the impact of the contract will have on utilities' balance sheets and credit metrics.

Because of these concerns, earlier today, Pepco and Delmarva Power filed notices of appeal of the order in circuit courts in Maryland.

At Pepco Energy Services, we are making good progress in growing the Energy Services business. As seen on Slide 11, Pepco Energy Services signed $173 million of new energy services contracts in the first quarter of 2012, including a $171 million contract with DC Water to design, build and operate a combined heat and power plant at DC Water's Blue Plains Advanced Wastewater Treatment Plant.

The 153-acre plant is the largest advanced wastewater treatment plant in the world. And the project will be the first in North America to use biogas from such a plant to produce steam and electricity. The 15-megawatt project will produce steam and electric power that will supply the Blue Plains facility with nearly 30% of its average power demand. In addition to building the plant, Pepco Energy Services will provide on-site operations and maintenance services. Construction will begin in July and is expected to be completed in December 2014.

While market challenges, such as the current economic climate, continued to slow the pace of contract signings, our perspective project development pipeline remains healthy, and we are aggressively pursuing new contracts. Pepco Energy Services has evolved to become one of the leading providers of energy efficiency and renewable energy services. And we believe the benefits of energy efficiency provide long-term growth opportunities for this business.

As for the Retail Energy Supply business, the wind down of this business continues to be on track, with substantially all of Pepco Energy Services' retail customer obligations being performed by June 2014. Also on track is the scheduled deactivation on May 31 of Pepco Energy Services' 2 oil-fired generating facilities in Washington D.C.

And at this point, let me turn it over to Fred Boyle.

Frederick J. Boyle

Thank you, Joe. Good morning and thank you for joining us today. Let me start by saying that I'm pleased to join the leadership team here at PHI and that I look forward to interacting with you on my new role. I'll now recap our earnings, address our performance by operating segment and discuss some topics of interest. We will then open the call to your questions.

Slide 12 summarizes our earnings for the first quarter of 2012 as compared to the first quarter of 2011. GAAP earnings per share from continuing operations for the first quarter of 2012 were $0.30 per share compared to $0.27 per share for the first quarter of 2011. Excluding the impact of the mark-to-market losses, earnings from continuing operations for the first quarter of 2011 would have been $0.28 per share. As you can see, Power Delivery earnings were flat at $0.21 per share for the first quarter of each of 2012 and 2011.

The positive impact on income tax adjustments, which increased Power Delivery's 2012 earnings by $0.05 per share, was the biggest driver for the quarter. The income tax adjustments were related to changes in our estimates of uncertain tax positions primarily due to progress made in resolving audit issues from the 2003 through 2008 audit years, including the method used to calculate deductable mixed service costs.

In our 2012 earnings guidance range, we had assumed $0.02 per share from income tax adjustments. Also positively impacting earnings were higher distribution and transmission rates, which each increased earnings by $0.01 per share. The higher rates were driven by increased investment in the Power Delivery business. The earnings increases were offset by lower weather-related sales versus the prior year, which decreased earnings by $0.03 per share. 80-degree days were lower by 26% as compared to the 2011 quarter. Keeping in mind that our distribution revenue in Maryland and the District of Columbia, which represents approximately 2/3 of total distribution revenue, is decoupled from consumption.

Also offsetting the earnings increases were higher interest, depreciation and operation and maintenance expense, which each decreased earnings by $0.01 per share as did lower Standard Offer Service margins. The higher operation and maintenance expense was due to increased tree trimming, system maintenance and reliability costs.

Pepco Energy Services earnings were $0.04 per share in the first quarter of 2012 compared to $0.06 per share in the first quarter of 2011, excluding the impact of mark-to-market losses. The $0.02 per share decline quarter-over-quarter was due to lower retail electricity sales volumes resulting from the ongoing wind down of the energy supply business and lower energy services project activity.

In our other nonregulated segment, earnings were $0.04 per share for the first quarter of 2012 compared to $0.03 per share for the same period in 2011. The $0.01 per share earnings improvement was due to the impact of income tax adjustments.

In our corporate and other segment, which is primarily unallocated corporate costs, earnings improved by $0.03 per share in the first quarter of 2012 as compared to the 2011 quarter. The increase was primarily due to lower post-employment benefit expenses and rounding.

Now I'll turn to some topics of interest for 2012. Turning to Slide 13, on March 5, PHI entered into an equity forward transaction in connection with the public offering of 17.92 million shares of common stock at $19.25 per share. The equity forward transaction must be settled on or before March 5, 2013. However, our expectation is to settle the forward transaction late this year.

The use of an equity forward transaction allowed us to substantially eliminate future equity market price risk by fixing our common equity sales price under the then-existing market conditions. It also allowed us to mitigate the immediate share dilution resulting from the offering by postponing the actual issuance of common stock until the funds are needed in accordance with our capital investment and regulatory plans. The net proceeds of the transaction will be used to make capital contributions to our utility subsidiaries, repay short-term debt, fund working capital needs and for other general corporate purposes.

On April 4, Pepco issued $200 million of first mortgage bonds, which bear interest at an annual fixed rate of 3.05% and are due April 1, 2022. On April 30, proceeds from the sale were used to redeem all $38.3 million of Pepco's 5.375% tax exempt bonds due 2024. Proceeds were also used to repay Pepco commercial paper, which was issued to temporarily fund capital expenditures and working capital and for other general corporate purposes.

Turning to Slide 14. Given the year-to-date results and our expectations for the remainder of the year, we are reaffirming our 2012 earnings guidance range for ongoing operations of $1.15 to $1.30 per share. The guidance range excludes the results of discontinued operations and the impact of any special, unusual or extraordinary items. The guidance range also excludes the net mark-to-market effects of economic hedging activities associated with the Retail Energy Supply business of Pepco Energy Services.

Now, let me turn it back to Joe Rigby for some closing remarks.

Joseph M. Rigby

Thanks, Fred. And in closing I believe we continue to make very good progress on our strategic initiatives that position us to provide value to our customers and our investors.

For the remainder of 2012, we will remain focused on improving reliability and customer satisfaction, and continue to aggressively pursue constructive regulatory outcomes and frameworks that allow us to earn our authorized rates of return on our investment.

With that, we would like to open the call to your questions.

Question-and-Answer Session

Operator

[Operator Instructions] And your first question comes from the line of Paul Patterson with Glenrock Associates.

Paul Patterson - Glenrock Associates LLC

The tax adjustments, I'm sorry if I missed this, what was causing that?

Frederick J. Boyle

This is Fred. The tax adjustments relate to open years going back to as far as 2003, and the bulk of those relate to some mixed service costs, which is overhead allocation capitalization issue that we reached agreement with on the IRS -- with the IRS.

Paul Patterson - Glenrock Associates LLC

Okay. And so that's kind of a little unusual, right? We're not going to -- or you're going to still...

Frederick J. Boyle

Yes, it wouldn't be an ongoing item. A lot of it is the interest that had been accrued associated with provisions we had established for that.

Paul Patterson - Glenrock Associates LLC

Okay. And then I heard your comments on the Maryland order that you guys were filing a notice of appeal on. Could you go over that a little bit, just elaborate a little more on that? You said there was an impact on SOS customers, if you could just -- I'm sorry, I didn't completely comprehend it.

Joseph M. Rigby

Well, I did -- Paul, this is Joe, then I'll turn it over to Tony. A primary concern we have is in recovering these costs specifically or only through SOS customers. It creates the possibility that if they migrate, then more of those costs are borne by the remaining SOS customers. And that's a concern that we had raised in the very beginning, and it's one that we take seriously because we're concerned about potential impact on customers. The other issue that we are concerned about is long-term power agreements and the potential negative impact that could have on the balance sheet. So we feel strongly about this. This doesn't surprise the commission, and we felt it was important to express this in the notice of appeal. Tony, I don't know if I missed anything but --

Anthony J. Kamerick

No, I think you got it all.

Paul Patterson - Glenrock Associates LLC

Okay. And this is -- you guys also outlined this issue, I think, in the letter. You and a couple of other -- some other utilities in Maryland outlined this issue prior to the execution of the contract, I believe, right?

Joseph M. Rigby

That's correct.

Paul Patterson - Glenrock Associates LLC

And I guess, I can now -- I guess, with the SOS part, why are they -- what was the reason, I guess, for the -- for making SOS customers that would have to be the -- why they would -- why wouldn't it be just the distribution company issue as opposed to -- do you see what I'm saying?

Joseph M. Rigby

Yes, we totally see what you're saying. In other states where we've had, I'll say, different but somewhat similar situations, we've looked to have something like this be part of a non-bypassable distribution charge across all customers. But, I mean, obviously, I can't speak for the commission in this particular case. We can only speak to the position that we have.

Paul Patterson - Glenrock Associates LLC

Okay. So they haven't articulated it? I was just wondering if they had.

Joseph M. Rigby

I don't know that we've had any articulation of that reasoning.

Paul Patterson - Glenrock Associates LLC

Okay. And then the leap year impact, is that in there in that decline, that weather-adjusted decline? Does that include the benefit of the leap year, or does it exclude it?

Frederick J. Boyle

Well it would include the leap year as reflected in the weather-adjusted numbers.

Paul Patterson - Glenrock Associates LLC

Okay. So the numbers are even lower than -- the growth is even lower. And you guys have been seeing this for some time and you guys have decoupling, and I realize that. But just in general, could you sort of give us some thoughts about the regions you're operating in and what the long-term usage patterns you guys are -- I mean, like I said, you guys already have decoupling, you saw this before, but just how should we think about that?

Joseph M. Rigby

Paul, this is Joe. And I'll take a shot at this and Fred can jump in. In some ways, across the 3 service territories, it's a mixed bag and it kind of gets worse as you go from West to East. Pepco is doing, I'd say, pretty decently. And obviously, that's supported by the impact of the government. We've been seeing employment growing, started growing back in 2010, 2010. We're also seeing real personal disposable income per employee grow. I think that if you look at, in aggregate, across the service territories, I think we had pegged year-over-year sales growth at 1.9% and looking at customer growth at 0.9%. So obviously, the customer growth is more applicable to the areas of decoupling. If you go further east to Delmarva, it's also in somewhat of a recovery mode, perhaps not as strong as that you would see in Pepco. But we are seeing employment growth and growth in real personal disposable income. When you get to Atlantic City, it's a little different story. The recovery is slower. Employment in the ACE region was hit very hard. Actually, it had experienced negative employment growth through October of last year. So it is beginning to pick up, but certainly, the pace is slower. And from a, I guess, an econometric view, that the employment in Southern New Jersey is not expected to return to, I'll say, prerecession levels in the foreseeable future, and we're obviously, more susceptible in there because we don't have decoupling in place. So like I said, it's a mixed bag and we're -- I think we are the beneficiaries of, to some extent, around decoupling. Paul, just going -- just to be responsive on the other issue you raised about the -- about the Maryland order, I think our General Counsel may have wanted to make a quick comment.

Kirk J. Emge

The Statutory Authority, under which the commission issued its order directing the electric distribution companies to sign the contracts, relates to the procurement of Standard Offer Service. So it's my understanding that they felt like they had to have the charges placed on the Standard Offer Service customers more to comply with the statute.

Paul Patterson - Glenrock Associates LLC

Okay. So it's the law?

Kirk J. Emge

That's their interpretation, yes.

Operator

And your next question comes from the line of Dan Eggers with Crédit Suisse.

Matthew Davis - Crédit Suisse AG, Research Division

It's actually Matt Davis. Just going back to the Maryland order. If you -- or do not receive a stay and they actually move forward with the construction of the plant, and considering that you guys will not own the plant, would the construction create any economics exposure for you?

Frederick J. Boyle

Well, I think, this is Fred, that's going to be determined on the final terms of the contract. Right now under the order, we're to negotiate terms with the developer. And those haven't been finalized, so those need to be finalized and submitted to the commission for approval. As Joe noted, one of our concerns is being put in a position where we may have to incur debt or reflect the liability on our books, which would not have a positive impact on our credit metrics. But that is certainly something we're concerned about and would like to see addressed.

Matthew Davis - Crédit Suisse AG, Research Division

Okay. And then could you just provide some additional details on the lower OPEB expense in the quarter, and whether we're going to see any additional savings throughout the year?

Frederick J. Boyle

When you say OPEB...

Matthew Davis - Crédit Suisse AG, Research Division

I mean the post-OPEB.

Frederick J. Boyle

All right. That is a -- something that we think that will only be in the first quarter of this year. As we look forward, I wouldn't factor in continued upside associated with that. It's unique situation given some quarter-over-quarter when we look at what occurred in the first quarter of '11 versus '12, so it's not something we anticipate being ongoing.

Matthew Davis - Crédit Suisse AG, Research Division

And then just one last question, how much help did you get from decoupling to offset the weak weather demand?

Frederick J. Boyle

This is Fred again. The decoupling was worth about $0.04 for the quarter for us.

Operator

[Operator Instructions] Your next question comes from the line of Paul Ridzon with KeyBanc.

Paul T. Ridzon - KeyBanc Capital Markets Inc., Research Division

Can you give some sense of magnitude as to what tax items are still open, just relative to kind of what we've seen in the past couple of years?

Frederick J. Boyle

Paul, this is Fred. As you know, we are open back to 2003, and of course, the lease issue still remains an open item back to 2001. So there are several items that are in place. As far as orders of magnitude, certainly the agreement we reached here on the mix service cost was one of the larger items, there are some repair allowance and other issues that are still outstanding. But we well may see some further impacts as settlements are reached on these open years, which we hope will occur actually by the end of this year or into next year for the '03 to '05, and possibly even next year on the '06 to '08 cycles, which should, once we get through that, eliminate some of these adjustments, these tax adjustments we've been seeing here for the last couple of years.

Operator

And we have one follow up question from the line of Paul Patterson with Glenrock Associates.

Paul Patterson - Glenrock Associates LLC

Possibilities for settlement in any of your jurisdictions on all these regulatory cases?

Anthony J. Kamerick

Paul, this is Tony Kamerick. There's always a chance for some settlements, I wouldn't rule them out. But right now, there's certainly nothing that we can point to indicate one way or another.

Paul Patterson - Glenrock Associates LLC

Okay. Smart meters, are we really seeing any change in customer behavior? Is it -- I mean, you guys have had these guys in there for a while in Delaware, I guess. Are you seeing anything that's suggesting you might see a change there?

David M. Velazquez

This is Dave Velazquez. Still a little bit early in the process, I'll say, for that. We had done some tests prior to this in the district under a program called Power Sense DC [ph]. The combination of information to the customer and different pricing regimes provided considerable benefits, and we expect to see that. Right now, we're just beginning to -- the process of beginning to roll out, I'll say, dynamic pricing critical rebate rates in Delaware to test set of several thousand customers. We made application to start the same phase-in in both Maryland and DC -- Pepco Maryland and DC. And haven't got full approval to move that forward yet. There are some hearings scheduled later in May in Maryland where hopefully we'll get some of the final issues resolved and we can move forward with that. And there's a host of other things around customer education that's going on as well. So we fully expect that we're going to continue to see those savings begin to ramp up.

Operator

And your next question comes from the line of Maury May with Power Insights.

Maury May

Just a quick question on the -- on again, this proposed generation in Maryland. Are there any incentive revenues associated with it in this order? Or is it just going to be the existing procurement revenues that you get?

Frederick J. Boyle

I'm not aware of any -- this is Fred. I'm not aware of any incentive revenues associated with that.

Maury May

Okay. But you get procurement?

Frederick J. Boyle

Well, we would get recovery through -- if you mean procurement, I mean, any costs we incur on the contracts for differences should be recoverable through our SOS customers.

Joseph M. Rigby

But there is no profit that we would realize from this. This is going to basically be a pass through, Maury.

Frederick J. Boyle

Correct.

Operator

With no further questions in queue, I would like to turn the call over to Mr. Joe Rigby for closing remarks.

Joseph M. Rigby

Thanks, operator. And again, thank you, all, for joining us today and for your ongoing interest in PHI, and have a great day. Take care.

Operator

Ladies and gentlemen, thank you for your participation in today's conference. This concludes the presentation. You may now disconnect, and have a great day.

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